April 24, 2014

Whistleblower’s Claims Against Former Employer Survive Summary Judgment

In a case involving “several questions of first impression,” the US District Court for the Southern District of New York denied summary judgment for all but one of the defendants in a case alleging violations of the whistleblower provisions of Section 806 of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley).

Plaintiff Phillip Leshinsky brought an action alleging that he was fired after objecting to his employer’s proposed scheme to use false overhead information in connection with a bid to obtain a Metropolitan Transit Authority contract. Plaintiff contended that he was first “marginalized” and then later terminated as a result of his objections.  Defendants moved for summary judgment on the grounds that plaintiff could not demonstrate the elements of a Sarbanes-Oxley wrongful retaliation claim.

To establish a prima facie case of wrongful retaliation, a plaintiff must demonstrate that (1) he engaged in a protected activity; (2) the employer knew that he engaged in the protected activity; (3) he suffered an unfavorable personnel action; and (4) the protected activity was a contributing factor in the unfavorable action.

The court made three significant rulings defining the scope and elements of a Sarbanes-Oxley retaliation claim.  First, for purposes of determining whether the employee engaged in a protected activity, the court rejected the “definitive and specific” information test and instead found that an employee need only report conduct that he or she reasonably believes constitutes a violation of federal law. Second, the court found that the reported violation need not be an “existing” violation; a violation likely to occur in the near future is sufficient. Finally, the court found that a report made by the employee to his or her superior is sufficient even if that superior is implicated in the alleged wrongdoing.

Leshinsky v. Telvent GIT, S.A. et al., No. 10-cv-04511 (S.D.N.Y. May 1, 2013).

©2014 Katten Muchin Rosenman LLP

About the Author

William M. Regan, Katten Muchin Law Firm, Litigation Attorney

William M. Regan represents banks, issuers and senior executives in securities class actions, stockholder derivative cases, complex financial product litigation and enforcement actions. Bill has been involved in litigating some of the largest and most complex matters in the securities litigation field, including Thornburg Mortgage, Inc., Madoff/Fairfield Greenwich, Global Crossing, Enron, WorldCom and the Oracle special litigation committee insider trading investigation.


About the Author

Jason F. Clouser, Litigation Attorney, Katten Muchin Law Firm

Jason F. Clouser concentrates his practice in litigation and dispute resolution matters. 


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